Retirement Insights
Is Delayed Retirement Impacting Your Bottom Line?
October 5, 2021
Americans are living longer than ever before — about 30 years longer, on average, than a century ago1 — so the risk of running out of money in retirement is very real.
Employers are coming to grips with this problem and are starting to understand that the financial wellness of their workforce — or the lack thereof — has a direct impact on productivity in the workplace and on the organization’s bottom-line results.
Research shows that Americans are struggling with their personal finances:
feel “very” or “somewhat” anxious about their financial situation2
are on track to retire3
plan to continue working in retirement3
When Workers Are Financially Stressed, Everyone Pays the Price
| EMPLOYEES | EMPLOYERS |
| 78% live PAYCHECK TO PAYCHECK4
|
43% of workers SPEND TIME ON THEIR PERSONAL FINANCES while at work5 |
|
22% have DIPPED INTO THEIR EMERGENCY SAVINGS5 |
55% of HUMAN RESOURCE PROFESSIONALS surveyed saw an increase in 401(k) withdrawals8 |
|
69% have LESS THAN $1,000 IN A SAVINGS ACCOUNT6
|
47%
INCREASE IN ABSENTEEISM8
|
|
49% believe they'll need to TAP INTO THEIR |
20¢ FOR EVERY DOLLAR saved for retirement, at least 20 CENTS is WITHDRAWN TOO EARLY9 |
Retirement Readiness: Not Just an Employee Issue, But a Business Issue
A workforce that is financially unprepared to retire can impact a business in a wide variety of ways. It is estimated that employers spend over $50,000 per employee each year the employee delays retirement.10 These costs include:
 |
 |
 |
|
Potentially higher |
Increased healthcare |
Lower productivity due to financial stress |
The long-term financial impact to your organization of delayed retirement can be significant.
Potential Long-Term Cost of Delayed Retirement to Employers
| 1 YEAR | 3 YEARS | 5 YEARS | |
| 100 person company with 3 employees delaying retirement | $150K | $450K | $750K |
|
1,000 person company with 30 employees delaying retirement |
$1.5M | $4.5M | $7.5M |
|
10,000 person company with 300 employees delaying retirement |
$15M | $45M | $75M |
Given the implications, employers feel an even greater responsibility for their employee’s retirement readiness: 80% feel extremely or very responsible for helping employees prepare for retirement, compared with 22% in 2012. And 83% of employers now believe that employee financial wellness programs and tools help create a more productive, satisfied and engaged workforce.11
How USICG Can Help
Our team evaluates retirement plans and implements strategies to better prepare your employees for retirement and help offset the financial impact to the organization. There are many ways we can help, including:
- Enhancing existing plan design
- Conducting a provider search to put you into a plan that gives you and your employees the best outcomes
- Providing ancillary retirement benefits like a Nonqualified Deferred Compensation (NQDC) Plan and/or a Direct Recognition Variable Investment Plan (DR-VIP) for employees who seek high tax-deductible contributions in excess of the defined contribution plan limits to help them save more
- Developing an employee education program to help them understand the value of saving, drive participation and improve their financial wellness
For more information on how we can help, please contact your local USICG representative, visit our Contact Us page or reach out to us directly at information@usicg.com.
Sources:
1 In 1900, the average life expectancy was 50 years old. According to the Centers for Disease Control and Prevention, the average life expectancy in the U.S. is 76.4 years old.
2 NextAdvisor study, June 2020.
3 Schroders, U.S. Retirement Survey 2021.
4 Payroll.org, Increase in Americans Living Paycheck to Paycheck in Just One Year, 2023.
5 John Hancock, Financial Stress Survey, 2020.
6 GOBankingRates’ Sixth Annual Savings Survey, 2019.
7 PwC, Employee Financial Wellness Survey, 2021.
8 Purchasing Power® survey of HR professionals and benefit brokers, December 2020.
9 Forbes, For Every Dollar Saved For Retirement, At Least 20 Cents Is Withdrawn Too Early, February 2020.
10 Prudential, Why Employers Should Care About the Costs of Delayed Retirements, 2019.
11 Bank of America, Workplace Benefits Report, 2020.
This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend that you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1021.S0824.99137a
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